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Executive Summary
Majestic Gold Corporation (MJS, Majestic or the Company) is a TSXVenture listed mineral exploration, development & production company with a particular emphasis on gold. All of the Companys current interests are in China. The focus of this note is the Song Jiagou property, in which the Companys subsidiary now has a 75% net revenue interest.
C$
Management Fan Zhong Kong* Lei Wang* Yi Dong Chen* Ying Liu* Hui Wang* Chao Zhao*
100 M 62 M 30 M 20 M 20 M 20 M 20 M
This document has been prepared following a 3 day fieldtrip to the Song Jiagou property, Shandong Province, China. The site visit and note publication are part of VCLs ongoing UK investor relations and corporate finance role with MJS. The document includes discussion of the Companys corporate structure, physical assets, mine plan and exploration activities. The document includes a NPV assessment of MJS as well as a suitable peer group comparison. The Song Jiagou property currently hosts a starter pit for an open pit mine, an underground mine, two mills and tailings storage facilities. MJS has been conducting exploration work on the Song Jiagou site since 2004. The underground mine has been in production since 2004, and smallscale trial mining began at the open pit in 2006. Production for the period January September 2010 was approximately 4,700 oz Au. During 2010, the two mills processed ore from the open pit at a rate of approximately 1,050 tonnes per day, and from the underground mine at approximately 350 tonnes per day, producing gold concentrate which is sold to a local smelter. The Company is in the process of constructing a new mill facility with a capacity of 6,000 tonnes per day. The electricity substation and water pumping station are already in place, and the mill is expected to be operational from June 2011. MJS has also purchased land for a new tailings dam, with construction of the dam also underway. The Company has applied for an extended mining licence that will allow production at the rate of 7,400 tonnes per day (LOM average grade expected to be milled of 1.5 g/t Au). The NI 43-101 resource estimate (October 2010) is: Indicated- 34 Mt grading at 1.1 g/t Au (1.2 Moz); Inferred- 39 Mt grading at 1.5 g/t Au (1.8 Moz), using a lower cut-off of 0.3 g/t Au and a capping level of 40 g/t Au. At the 7,400 tonnes per day rate of production, the life of mine is estimated at 22 years. As part of this document, VCL has attempted to assess the value that the Song Jiagou project will bring to MJS; this has been done by undertaking a peer review of similar projects in China and also by modelling the intended mine development plan. This has resulted in a base case scenario NPV (C$1,000/ oz Au) (8%) of C$432 M for the 75% net revenue interest that MJS has in the project, for a 22 year mine life.
Strengths Low, fixed, operating costs. NI 43-101 compliant resource. Project has been in production for over 12 months. Construction of the new mill and associated facilities has so far progressed to schedule. Potential for rapid repayment of initial capital within 2 years. Risks Contract mining price is fixed in RMB so MJS is exposed to exchange rate fluctuations. China may implement more stringent environmental and mine closure obligations during the mine lifetime. Pending application for increased rate of mining. Significant increase in mining rate required to meet production schedule. Mine plan includes ore defined as inferred resources. Current mine plan may require sourcing of a new tailings storage facility, and potentially village relocation. Analysts Dr Janette Tourney +44 (0) 207 248 9773 janette@vicaragecapital.com Mr Will King +44 (0) 207 248 9773 william@vicaragecapital.com
* These listed significant shareholders are individuals understood to be associated directly or indirectly with Dahedong Smelter Mill.
Contents
Aim and scope of research Introduction Properties and subsidiaries Background information: China Asset: Song Jiagou Staff & relationships in country Peer comparison matrix Valuation Comments and summary Capital structure Key management Summary financials Appendix 2 3 3 4 5 14 15 17 18 19 19 20 21
This document was produced following a three day site visit by the author, during which the Song Jiagou mine and processing plants were visited, as well as MJSs site office on the Song Jiagou property. All financial units are in Canadian dollars (C$) unless otherwise stated. Units used in this report include: hectares (ha); kilometres (km); metres (m); millimetres (mm); micrometres (m); metric tonnes (t); grams (g); ounces (oz); kilovolts (kV); million (M); thousand (k); Yuan Renminbi (RMB).
VCL
Vicarage Capital Limited 4 College Hill, London, EC4R 2RB, UK Tel + 44 (0) 207 248 9773 Fax + 44 (0) 207 248 6680 Web: www.vicaragecapital.com
Introduction
Figure 1. Map of China, showing location of Song Jiagou asset.
Majestic Gold Corporation is a TSX-Venture Exchange listed company focussed on locating, acquiring, exploring and developing natural resource properties, with an emphasis on gold. MJS is part of Global Catalyst Group. All of the Companys current property interests are in China. The focus of this report is the Song Jiagou property, located on the Jiadong Peninsula in north-east China. MJS has a 94%- owned subsidiary, Majestic Yantai Gold Ltd, which in turn has a 100% interest in a Chinese co-operation company, Yantai Zhongjia Mining Co. The Song Jiagou property is 100% owned by the co-operation company. MJS has a 75% interest in the net revenue from the Song Jiagou project. The remaining 25% net revenue interest is held by Dahedong Smelter Mill (Dahedong), MJSs Chinese partner. All material seen and discussed below is with regard to that owned or leased by MJS unless otherwise stated. This report has been produced following a 3 day field trip to China by Dr Janette Tourney. During this time, Dr Tourney visited the Song Jiagou property and MJSs office on site, and met with key management and operational staff.
All of the Companys interests are in China. The Sawayaerdun project was sold in 2009, but is included in Table 1 as MJS has yet to receive the final payment from the sale (C$0.85 M). The remaining interests are all in Shandong Province: the Song Jiagou property, Jingang licences and three other mining licences, not presently being exploited. The Song Jiagou property consists of an open pit which is currently being mined at a rate of approximately 1,050 t/day and an underground mine (the Fayunkuang Mine) which is being mined at a rate of approximately 350 t/day. The mines and mills are operated by Dahedong. Dahedong in turn subcontracts the mining and milling to other local companies. The Mineral Exploration Licence is 3.76 km2 in area. The underground mining licence is 0.3421 km2 in area and is contained within the Exploration licence. MJS has a site office on the Song Jiagou property, and has use of two mills on the site, owned and operated by Dahedong. The company is currently building a new mill facility on the Song Jiagou site. The gold concentrate produced by the mills is sold to Shandong Humon Smelting Co. Ltd., located 35 km from Song Jiagou.
VCL
Vicarage Capital Limited 4 College Hill, London, EC4R 2RB, UK Tel + 44 (0) 207 248 9773 Fax + 44 (0) 207 248 6680 Web: www.vicaragecapital.com
Politics1 China has been ruled by the Communist Party of China (CPC) since 1949. There are currently 8 other democratic parties recognised in China, but all are affiliated to the CPC. China has 33 administrative units under the central government, consisting of 22 provinces, 5 autonomous regions, 4 municipalities and the special administrative regions of Hong Kong and Macau. Chinas participation in the global economy has increased dramatically since the 1970s and it became a member of the World Trade Organisation in 2001. The Chinese Communist Party still has the right to dictate economic policy, but in practice the running of the economy is carried out by the State Council. The State Council retains control of most industries considered to be of national economic importance, but supervision of most industrial activity is devolved to municipal, provincial and state governments. Development in the country has been limited by constraints in areas such as energy supply, communications and transport infrastructure, but large sums are being invested to overcome these issues. Since the financial crisis of 2008, during which there was a collapse in Chinese exports, the government has sought to reduce dependence on western economies. Instead, links with and investments in other developing countries such as Brazil have been strengthened. China now has the worlds largest mining industry with over 25,000 mines in operation. Exploration and mining activities are administered and supervised by the Ministry of Land and Resources. All mining activity is subject to a mineral resource tax equivalent to approximately C$0.75 per tonne of ore. China has been the worlds largest gold producer since 2007, and production increased by 72% between 1999 and 2008. The country hosts about 7% of the worlds total gold deposits. China currently has approximately 1,200 gold mines. Foreigners have been allowed to own gold mines since 2002. There is a monopoly on gold in China and all gold produced in the country is administered by the state. Purchase is by the Bank of China, although sale takes place on the open market at the Shanghai Metals Exchange.
Economy2-3
Source: Encyclopaedia Britannica
Mining3-5
www.gov.cn
www.chinamining.org
British Geological Survey, Mineral Information and Statistics for the BRIC Countries 1999-2008.
VCL
Vicarage Capital Limited 4 College Hill, London, EC4R 2RB, UK Tel + 44 (0) 207 248 9773 Fax + 44 (0) 207 248 6680 Web: www.vicaragecapital.com
Ownership The licences and title to the Song Jiagou property are held by the Chinese co-operation company, Yantai Zhongjia Mining Co. MJSs subsidiary, Majestic Yantai Gold, acquired a 60% interest in the co-operation company after fulfilling (on 1st Jan 2009) a requirement to spend approximately US$5.3 M on exploration and/or development, over a 4 year period. The remaining 40% interest in the co-operation company was acquired through the Acquisition Agreement of 11th February 2010 (discussed below). MJS has a 75% interest in the revenue from the Song Jiagou project, and Dahedong has a 25% interest. All mining and processing activities are contracted to Dahedong (see appendix for diagram). MJS has submitted an application for renewal of the Mineral Exploration Licence, which is due to expire in June 2011. Location and access The Song Jiagou property is located on the Jiadong Peninsula, Muping County, Peoples Republic of China. The Song Jiagou mine and processing plants are approximately 30 km southeast of the coastal city of Yantai, which is a 90- minute flight southeast of Beijing. The property is accessed from Yantai via paved roads, and a new highway is under construction close to the site. The Song Jiagou property hosts an open pit mine and an underground mine. Processing of the ore is carried out at two separate mills, both of which are located approximately 4.2 km from the mines. The historical and current tailings dams are situated adjacent to the mills. MJS has a site office on the Song Jiagou property, adjacent to the offices and facilities of Dahedong. The Companys head office is in Vancouver, Canada, and was not visited by the author.
Figure 8. Geology of the Jiadong Peninsula.
Stratigraphic units
Jiadong Group: granulite, amphibolite, gneiss schist. Jinshan and Fenzichan Groups:amphibolite, serpulite, granulite, schist, marble, quartzite. Supracrustal slate, marble, quartzite, limestone.
Magmatic rocks
Proterozoic granite. Granite, granodiorite. Granite, granodiorite, diorite, monzonite. Basalt, rhyolite, andesite.
Faults
Deep-seated fault. Local fault.
Gold deposits
Very large (> 50 tonne). Large (30- 50 tonnes). Medium (10- 30 tonnes). Small (1-10 tonnes). Occurrence (< 1 tonnes).
Source: Authors photo Yao, Y. et al. (2002) Mesozoic Gold Deposits in the Eastern Shandong Peninsula, P.R. China- Preliminary Geology, Geochemistry and Fluid Inclusion Characteristics.
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Local environment and climate The Song Jiagou property is located within a region of low hills (maximum elevation 600 m), approximately 30 km from the coast of the Jiadong Peninsula (Figure 1). The local climate is relatively mild, and does not suffer the severe winters of the Chinese interior so mining and exploration can therefore be carried out all year round. The region is very dry, which can increase the problem of dust generation from the tailings dams. Shandong province is the second wealthiest in China, thanks in part to the Jiadong Peninsula gold belt. The other main industry is farming, and the region is well known in China for its wine production. Whilst Yantai city is heavily developed, the land surrounding the mine largely consists of small terraced fields, where the main products grown are apples, peanuts and sweetcorn. Geology7-8 Regional Regionally, the Jiadong Peninsula is located on the south-eastern margin of the North China craton, and on the western margin of the Pacific Plate. It is bounded to the west by the Tan-Lu fault zone, which extends from the Yangtze River to the Russian Far East. The Jiadong Peninsula has been affected by two major orogenies; the Indosinian collision between the North China and Yangtze cratons (200230 Ma), and the Yanshanian subduction of the Pacific plate beneath Eurasia during the middle Jurassic. Local The Song Jiagou property (Fayunkuang gold deposit) is located within the Muping-Rushan gold belt of the Jiadong Peninsula gold province (Figure 8), which is in the eastern part of the Jiobei Terrane, the more northern of the two pre-Jurassic terranes on the Peninsula. The Jiobei terrane consists of approximately 40% granitoid intrusions, 30% Archean greenstone, Proterozoic and Mesozoic sequences and Quaternary alluvium. The Song Jiagou deposit lies to the southeast of the Zhuwu-Dianji fault and consists of a high-energy, well-rounded but unsorted conglomerate belonging to the Linshishan Formation, a member of the Liayang Group. Clasts range in size from millimetres to metres and are derived from Proterozoic gneiss as well as mafic gneiss and sediments. The conglomerate is understood to be Upper Cretaceous in age and unconformably overlies the Proterozoic Jinshan Group. Mineralisation The source of the mineralisation is the Mesozoic granite underlying the property at a depth of 400- 600 m. The granitoid intrusions of the Jiadong peninsula are both Mesozoic and Precambrian in age, but mineralisation is exclusively associated with the Mesozoic intrusions. Gold grade increases with depth in boreholes, and visible free gold was encountered close to the granite contact. The mineralisation on the Song Jiagou property is shear or fault-zone rather than vein hosted, as is found elsewhere on the Jiadong Peninsula. Exploration work carried out on the site indicates that the highest grades of Au mineralisation are associated with these narrow, linear zones. Away from these zones, there is a halo of lower grade mineralisation (Au grade is approximately 0.3-0.5 g/t). The mineralisation event is thought to be largely responsible for the cementation of the matrix and alteration minerals including sericite, silica and K-feldspar are found within the region of the faults. The gold mineralisation is found in the matrix of the Cretaceous-age conglomerate. Micron-sized free gold is present, but the majority of the gold is associated
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Source: Authors photo Wardrop, Song Jiagou Project, Shandong Province, China- Preliminary Assessment Technical Report. 25th February 2011.
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Wardrop, Technical Report on the Song Jiagou Property, Shandong province, China (Resource Update). November 2010
VCL
with sulphide minerals including galena, sphalerite and chalcopyrite, but principally pyrite, which is present as up-to-millimetre sized euhedral crystals within the conglomerate matrix (see Figure 9). Exploration and Mining Historical and artisanal As China has been mapped extensively by geologists associated with the Chinese army since the 1960s, it is thought likely that small-scale mining may have taken place on the Song Jiagou site as long ago as the 1970s, but there are no records to verify this. The Fayunkuang underground mine has been operated since 1992, and is licenced to produce 66000 t per annum. Four levels have been excavated at the Fayunkuang mine, at levels of 0, -40, -80 and -120 relative to sea level, with two parallel 300 m drifts at each level. Shandong Yantai Muping Gold Mine (Muping) carried out exploratory drilling work on the Song Jiagou site between 1999 and 2004, and commenced exploratory mining at the site in 2001. MJS exploration and mining MJS has undertaken exploration work on the Song Jiagou site since 2004 (Table 3). Small-scale trial mining has taken place at the open pit since 2004 and the Company was pilot milling at a rate of approximately 250 tonnes per day between October 2007 and December 2009. As this was considered to be a pit rehabilitation phase, separation of ore and waste was not considered practical and the results have not been released. Historical mill performance (2006-2009) is listed in Table 4 (production for 2010 is discussed in the Current activity section). Mining from the open pit was scaled up in December 2009, following the purchase of the remaining 40% interest in the site from Muping, by MJSs Chinese partner Dahedong. Subsequent to this purchase, the open pit has been operated by Dahedong. The underground mine has been operated by Muping since 2004.
Table 3: MJS exploration activity at Song Jiagou. Date Activity 2003 Agreements signed to evaluate China projects. 547 channel and panel samples were collected from crosscuts 2004 on levels 2, 3 and 4 of the underground mine in order to establish the gold distribution within the conglomerate. 25 holes were drilled from the surface, with a total length of 2005 6,558 m. Nine holes were drilled from surface, with a total length of 3,701m. 2006 11 holes were drilled underground and 1,987 underground channel samples were collected. 46 trenches with an aggregate length of 3,628 m were dug, and 3,221 samples were collected from these. Gold content ranged from 0 to 35.8 g/t Au, with approximately 5% of assay values exceeding 1 g/t Au. 2007 12 surface holes with an aggregate length of 1,867 m were drilled. A total of 1,743 samples were collected and assay values ranged from zero to 48.7 g/t gold. Approximately 6.5% of the samples had a gold content greater than 1.0 g/t. Acquisition of additional 40% interest in Song Jiagou. Mining 2010 operations scaled up.
Source: MJS
Table 4. Mill performance (2006-09). Grade (g/t Au) Au Year Tonnage Conce recovery Feed -ntrate (%) Large processing plant 2008 171,242 0.44 24.7 88.7 2009 256,141 0.48 27.0 89.8 Total/ 0.46 26.1 89.3 427,383 Mean Small processing plant 2006 78,652 0.48 29.0 89.7 2007 129,685 0.55 35.5 91.1 2008 32,862 0.97 29.9 93.5 2009 63,449 1.21 35.5 93.2 Total/ 0.71 33.4 91.9 304,648 Mean
Source: MJS
VCL
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Resource estimates
Figure 15. Stockpile from open pit, adjacent to new mill.
The initial NI 43-101 resource estimate for MJSs Song Jiagou property was published in 2006, and updated in 2007. The most recent NI 43-101 resource estimate was published in April 2010 and updated in October 2010. The updated report included a revised resource estimate that was calculated by rotating the original model parallel to the trend of the deposit and lowering the cut-off to 0.3 g/t. This lower cut-off was selected by MJS to reflect a reduction in production cost after the Mining Contract was renegotiated. The technical reports upon which the NI 43-101 resource estimates are based were all prepared by Wardrop Engineering Inc. The October 2010 Indicated resource was estimated by kriging to contain approximately 33.7 Mt at an average grade of 1.1 g/t Au, based on a lower threshold of 0.3 g/t Au and a capping level of 40 g/t Au. The Inferred resource is approximately 38.8 M tonnes at an average (capped) grade of 1.5 g/t gold. The Song Jiagou deposit is considered to consist of two different populations of mineralisation; narrow, high grade zones contained within fractures, and a lower grade surrounding zone. However, modelling of sample data by Wardrop for the current, and previous, resource estimates was unable to separate the two populations in terms of grade. This failure was attributed to insufficient available data. Consequently, the resource estimate has been calculated as a single population. Using the data available: compliant resource estimates, diamond drilling data, production and pit extraction data from around the concession, it is reasonable to acknowledge the following:
Total NI 43-101 defined resource (18th Oct 2010): Indicated- 33,739,586 tonnes at 1.147 g/t Au (1,244,211 oz). Inferred- 38,812,054 tonnes at 1.467 g/t Au (1,830,576 oz). These resources were defined at a cut-off grade of 0.30 g/t Au and a capped grade of 40 g/t Au. It is estimated that, of the total resource of approximately 3.0 Moz Au, approximately 2.3 Moz Au are potentially recoverable under the current mine plan.
Table 5. Resource estimates for the Song Jiagou property. Year 1998 2006 Company No. 3 Geological Brigade MJS/Wardrop NI 43-101 Not compliant Compliant Category N/A Tonnage (MT) 1.8 Grade Au Threshold (g/t) grade (g/t) 6.8 NA Capping grade (g/t) NA Contained metal (g Au) 12,240,000 Orientation*
a
NA
6.10 1.0 Indicated 6,100,000 0.5 NA Parallel Inferred 12.1 0.8 9,680,000 8.8 1.5 Indicated 13,200,000 2007 MJS/Wardrop Compliant 0.5 NA Parallel Inferred 18.2 1.3 23,660,000 April 24.9 1.3 Indicated 32,370,000 Compliant 0.4 40 Un-rotated MJS/Wardrop 2010 Inferred 28.1 1.9 53,390,000 October 28.0 1.3 Indicated 36,717,397 Compliant 0.4 40 Parallel MJS/Wardrop 2010 Inferred 30.7 1.8 54,115,477 Indicated 38,699,305 33.7 1.1 October Compliant 0.3 40 Parallel MJS/Wardrop 2010 Inferred 38.8 1.5 56,937,283 a * Orientation of the block model used to calculate resource estimates was either rotated parallel to the trend of the mineralisation, or un-rotated.
Source: MJS
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Current activities
Figure 17. Breaking up ore from the underground mine.
Recent production The licences held by MJS are shown in Table 2. The Underground Mining Licence permits a mining rate of 66,000 tonnes per year. The rate of mining is currently limited by the capacity of the two mills on site, the larger of which can process the 1,050 t produced daily from the open pit. The smaller mill processes the 350 t/day produced from the underground mine. MJS has submitted an application for permission to increase the mining rate to 7,400 tonnes per day, all of which will be extracted from the open pit. From January until September (2010), 225,109 t of ore from the open pit has been milled, grading between 0.36 and 0.49 g/t Au, with a mean grade of 0.43 g/t Au.
From January until September (2010), 77,549 t of ore from the underground mine has been milled, grading between 0.58 and 1.06 g/t Au, with a mean grade of 0.87 g/t Au. In September 2010 the reserve ore stockpile for the underground mine was 5,463 t. The reserve ore stockpile from the open pit was 63,168 t in September 2010, and in November 2010 was estimated at approximately 120,000 t. The ore processed from both the open pit and underground mines recovered an average of 89.09 % of recoverable gold. This resulted in a total production of 5,248 t concentrate at an average grade of 26.47 g/t Au (4,709 Troy oz Au) between Jan and Sept 2010.
Table 6. Recent mill performance (Jan- Sept 2010). Grade (g/t Au) Au Month Tonnage recovery Feed Concentrate (%) Large processing plant Jan 10 27,203 0.45 29.4 89.1 Feb 10 27,758 0.44 26.8 88.7 March 10 27,258 0.44 22.5 88.1 April 10 30,625 0.37 26.2 86.5 May 10 30,217 0.43 21.7 88.3 June 10 31,092 0.36 17.0 86.0 July 10 18,120 0.47 20.3 89.3 Aug 10 15,488 0.49 26.5 86.0 Sept 10 17,348 0.45 31.2 86.9 Total/Mean 225,109 0.43 23.8 87.7 Small processing plant Jan 10 3,180 0.64 31.3 92.3 Feb 10 11,530 0.58 37.9 91.5 March 10 9,547 0.84 38.0 93.8 April 10 11,357 1.03 44.4 94.9 May 10 10,129 1.02 29.7 95.1 June 10 11,176 0.84 27.0 94.1 July 10 10,775 0.81 29.2 93.8 Aug 10 4,041 1.06 35.8 90.9 Sept 10 5,814 1.05 32.9 92.2 Total/Mean 77,549 0.87 33.4 93.6
Source: MJS
Plant and processing Underground mine Ore from the underground mine is raised to the surface in traditional mine carts using a double lift, with a capacity of 1.6 tonnes. The ROM is directly outside of the mine entrance (Figure 16). The ore is mechanically broken up (Figure 17), and then loaded into 50 tonne trucks (Figures 18-19) for transportation to the smaller (350 t/d) of Dahedongs two existing mills, both of which are located approximately 5 km away from the mine.
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Open pit Ore from the open pit is extracted by conventional drill and blast mining. It is then loaded directly into 50T trucks and transported to the larger mill (1050 t/d) for processing. Transportation and processing Processing at both of the mills consists of a succession of crushing and grinding stages (primary crusher, cone crusher, ball mill) to produce ore crushed to 100% passing 22 mm and then ground to approximately 50% passing a 75 m mesh size. The ore then proceeds to a succession of flotation cells where the free gold and pyrite-associated gold is separated by rougher and scavenger flotation. The concentrate is dewatered in an outdoor courtyard prior to transportation by truck to a local smelter facility, Humon Smelting Co. Ltd., which is located approximately 10 km northeast of the Song Jiagou property. There is a commercial scale on the road to the mill for weighing the trucks used for transporting ore and concentrate, but this was not in operation at the time of VCLs site visit. The concentrate also contains a quantity of silver, but MJS does not assay for it, or receive payment for the silver content. The smelter does extract and sell the silver from the concentrate. Historical production data shows that the average gold recovery for the 0.43 g/t Au feed from the open pit was 87.7%. The average recovery for the 0.87 g/t Au mill feed from the underground mine was 93.6%. Preliminary recovery testing was carried out in February 2010 by Yantai Jinyuan Mining Machinery Co., Jinyuan. It was found that 92.9% of the Au from a 0.68 g/t Au sample, at a grind size of 52% passing 75 m, was recovered into a 22. 5% Au concentrate.
Figure 25. Aerial view of the Song Jiagou mills.
Tailings The tailings are transported by pipeline to a tailings dam adjacent to the location of the mills. The site contains three historical tailings dams, and a fourth that is currently in use (Figures 23-24). This tailings dam is close to capacity, at the current production rate of 1,400 tonnes per day. The historical and current tailings dams were created by the sequential infilling of a valley. The volume of tailings held in the dams is not known as MJS does not have records either of how long the tailings dams have been in use, or of the original topography of the infilled valley. The three historical tailings dams have been planted with grass and small bushes, as a means of reducing dust generation from the surfaces. The
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government regularly y conducts sampling s of downstream m water cour rses in order to assess whe ether there is any harm mful discharg ge from the mine. During th he site visit t, the autho or was inform med that th here has be een no recorded discharge of o acidic leachate. Equipme ent The costs of mining, milling and transportatio t n are include ed in MJSs mining contract with Dahedong. As suc ch, all equip pment is ow wned or leas sed by Dahedon ng or the sub bcontractors employed e by y Dahedong.
an Mine pla MJS has submitted an a application n to increase e the rate of mining m at the e Song Jiagou property in or rder to achieve the desire ed rate of ap pproximately y 7,400 tonnes per p day. A mine plan is outlined in the NI 43-101 4 Prelim minary Assessm ment5 undertaken by Wa ardrop and published in February 2011. Details of o the new plant p required are outline ed below, and the prelim minary mining schedule s is presented in Table 7. The potentially min neable undertaken by Wardro resources, based on n pit shell optimisation o op, are shown in n Table 8. The new w processing plant is intended to proc cess 6,000 t/ /day whilst th he two current plants p continu ue to produce e 350 t/day a and 1,050 t/d day, thus ach hieving the desir red processin ng rate of 7,400 t/day. G Gold concen ntrate produc ction is estimated d at 230 t/da ay, and the concentrate c g grade will be e approximat tely 30 g/t Au, based b on rec cent producti ion statistics s (Table 6). It should be noted that MJS S intends to mine m and pro ocess higher r grade mate erial during th he first few years s of mine life e (see Tables s 7-8, and Table 13a for the full prod duction schedule e). The Comp pany intends s to operate f for approximately 330 da ays per year. The locations of the three e plants in relation to ea ach other an nd the current ta ailings pond are shown in n Figure 25. The Fayunk kuang underg ground mine will be decomm missioned and d all future m mining will be from the ope en pit.
Figure e 26. Cross sec ction of the planned Song Jia agou pit, showi ing viable depo osit at a range of gold d prices.
g/t kt kt kt
koz koz
T Table 8. Potent tially mineable e resources. Cl lassification Indicated Inferred Tonnes 29,875,527 22,806,473 Au (g/t) 1.207 1.936
Source: MJS
Source: MJS
New mill The Com mpany is co onstructing a new mill (Figures 27 7-32) close to the location of o the mills currently c in use u for proce essing of the e Song Jiago ou ore.
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The new mill is designed to have a processing capacity of 6,000 tonnes per day, taking the total milling capacity at Song Jiagou to 7,400 tonnes per day. At the time of VCLs visit (November 2010) the estimated completion date was June 2011. The new processing plant will also house an assay laboratory. Reclaimed water from the tailings dam will provide the main source of process water for the new mill. The balance of the required water supply will come from the Jincheng River, where the Company has constructed a new pumping station (Fig. 33). The supply lines to the new mill have been installed. As noted in the Preliminary Assessment, the impact of extracting water (approximately 2,600 m3 per day) from the river has not been studied. As this is a dry region, this particular environmental impact does need to be addressed. The company has built a new 35 kV substation to supply electricity to the new mill. The substation has been constructed, and is ready to receive power from the grid as soon as the mill construction is complete. The new mill will require 12 kV of electricity and the rest will be used to supply local villages. The ore stockpile from the open pit (Figure 15) is intended for processing when the new mill opens. New tailings dam The company recently purchased land to locate a new tailings dam (Figure 34). The clay-core dam was under construction at the time of VCLs visit and will have an effective capacity of 7.1 Mm3 (total capacity of 9.5 Mm3). At the intended processing rate of 7,400 tonnes per day, the new tailings dam will have a lifetime of 4.4 years. As the predicted life of mine is 22 years, the Company is considering further tailings disposal options. The dam will be raised sequentially by an upstream-type embankment, and raising the height from 48 m to 70 m is a possible option for increasing tailings disposal capacity. This option will require a full review of the tailings dam design, as well as local environmental, geotechnical and hydrological impacts. This is MJSs preferred option, and an engineering study is currently underway in order to determine the viability of this route for tailings storage. Alternatively, the tailings could be dry stacked, or else transported to an alternative tailings storage facility. In this case, MJS will have to identify a suitable site. Contracts Mining Contract The mining contract is a three-party agreement between Yantai Zhongjia Mine Development Enterprise, Shandong Yantai Muping Gold Mine and Dahedong Smelter Mill, and was formalised on 14th Nov 2007. The terms of the agreement are as follows: Dahedong will provide immediate access to one 300 tpd mill, and access from 1st Aug 2008 to a second, 1,200 tpd mill. Exclusive use of the mills is set as 30 years. Dahedong will be entitled to 20% of the net profit from the 1,200 tpd mill. Once the output of all mills on site exceeds 3,000 tpd, Zhongjia will have the right to continue paying Dahedong 20% of the net profit of the 1,200 tpd mill as the royalty, or negotiate for the land and equipment owned by Dahedong. During the term of exclusive use, Dahedong warrants that the operation costs for all the mills will not exceed RMB 70 per tonne. The operation costs includes the costs and expenses incurred in mining, transportation, milling and tailing and disposal of solid waste, in addition to any other costs and expenses arising from the
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mining and processing operations. The cost of mining and milling under the Mining Contract is 75 RMB per tonne processed (Mining Fee), plus 25% of net profits go to Dahedong.
Acquisition Agreement The Acquisition Agreement was entered into on 11th February 2010, between MJS and the Muping Group (seven individuals), with the objective of acquiring the remaining 40% interest in Yantai Zhongjia Mining Enterprise. The terms of the Acquisition Agreement include the following:
Source: Authors photo
Table 9. Initial capital costs. C$ (M) Power Supply System Water Supply System Process Equipment Process Plant Construction Land Acquisition Tailing Storage Facility Mining and roads Indirect costs Contingency Project risk (15%) TOTAL 1,989 2,803 12,108 8,175 10,716 5,572 10,893 3,658 5,154 9,062 70,13
Source: MJS
The Mining Permit for Song Jiagou will be held by Yantai Zhongjia Mining Enterprise, enabling mining to commence at the site. Dahedong Smelter Mill will undertake mining operations at Song Jiagou. The Agreement provides for the construction of the new mill and associated facilities. The cost of acquiring land for the new mill will be borne exclusively by Dahedong if the capacity of the mill does not exceed 5,000 t/day. Construction costs will be borne 75% by Yantai Zhongjia Mining Enterprise and 25% by Dahedong. Dahedong will carry out mining operations at no cost to MJS for a period of 30 years. This will include mining, transporting, and processing ore and tailings and other waste material. Dahedong will be responsible for dealing with the Chinese authorities in respect of mining operations. Dahedong will receive a mining fee of RMB 75 per tonne. The mining fee and Dahedongs share of net profits will be payable solely from proceeds from the sale of gold or other metals from the Song Jiagou property. The cost of smelting the concentrate produced is based on a fee of RMB 100 per tonne of concentrate.
Smelter Contract
Necessary immediate investment Cost estimates have been made by Wardrop and MJS, and published in the Preliminary Assessment: Initial capital cost: C$70 M Working capital cost: C$7.7 M Sustaining capital cost: C$70 M The initial capital cost is broken down in Table 9. These costs are associated with construction of the new facilities and tailings dam. Further Investment MJS has made plans for approximately C$70 M of sustaining capital costs over the lifetime of the mine (outlined in Table 10). The majority of this cost will be associated with storage of tailings when the tailings dam currently under construction reaches the end of its life in approximately 4.5 years. Exploration The company intends to undertake further exploration over the next 2 years: Phase 1: C$1 M- convert Inferred resources in the upper pit area to the Indicated category. Phase 2: C$3.5 M- define resources in the mid-pit area, and test for additional resources at depth and along strike.
Table 10. Sustaining capital costs. C$ (M) Mining Salvage at Mine End Owner's Costs TSF Reclamation costs Contingencies Sunk Costs TOTAL 10,250 0 6,926 24,538 10,534 10,171 8,000 70,42
Source: MJS (Note: conversion from US$ to C$ based on Wardrops exchange rate of 0.92).
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Staff At time of the VCL site visit, MJS had the following staff breakdown: One Canadian member of MJS staff is always present on site. The underground mine is staffed by workers from Muping. The open pit is staffed by workers from Dahedong. The mills are staffed by workers from Dahedong.
Security Security is not considered to be a requirement on Song Jiagou site as the end product is gold concentrate rather than dore. The concentrate is transported to the smelter in the same 50 tonne trucks used to transport the ore to the mills. Local community All permits and other applications have to be approved at local (village) level before proceeding to County and Province level. The Song Jiagou project is not sufficiently large-scale to require approval at national level. This structure ensures that any decisions must be approved by the local community or will not proceed any further. According to MJS, relations with local people are good, and there are no particular cultural or ethnic groups that object to the mining activity. However, under the current mining plan it may be necessary to undertake village relocations in order to accommodate the outer pit shells. Lab MJS sends all core and concentrate samples for analysis by SGS Tigian, a North American 9001/2 approved lab. MJS splits all cores in half and sends one half for assay by SGS. The other half core is stored in a locked building on the Song Jiagou site (Figure 37). The sample pulps and coarse rejects are returned by SGS to MJS for storage at a secure facility in Yantai (not visited by the author). QAQC The samples analysed for the 2007 drill and trenching programs were analysed along with blanks and standard reference materials. One-meter lengths of core (half cores) from both drill and trench sampling were sent to SGS Mineral Services in Tianjin. One-kilogram pulverized samples were subject to screening for metallic content prior to analysis for Au by fire assay with an atomic adsorption spectroscopy (AAS) finish. A total of 174 blanks were analysed, equivalent to 3.5% of the total sample population. The blanks were all found to be below the detection limit (5 parts per billion) for Au. A set of four standards were used during analysis of all the drill and trenching samples. The standards were prepared by CDN Resource Laboratories of Delta, British Columbia, Canada, and had Au values ranging from 0.12 g/t to 14.83 g/t. It was noted in the 2010 Technical Report by Wardrop that there was a high failure rate associated with analyses of the top standard, indicating that results for higher grade samples may be unreliable. However, it was pointed out that this potentially affects only a small minority of the sample population as only 18 out of approximately 5,000 sample assays exceeded 10 g/t. Environmental legislative restraints
Source: Authors photo
There are no known environmental obligations. There are no closure obligations. The historical tailings dams have been planted with trees and grass to reduce dust generation, and this is the extent of the remediation planned by MJS for the current
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and new tailings dams. The government regularly undertakes sampling downstream from the tailings dams.
Two different environmental impact assessment (EIA) studies have been undertaken. The first, in August 2010, was undertaken by Quingdao University and investigated the impact of a process rate of 400 tonnes per day. The second, in December 2010, was conducted by Shandong Academy of Environmental Science and studied the impact of a process rate of 6,000 tonnes per day. Both studies considered the impact of the process and tailings dam on the environment, including environmental protection measures, and recommendations for safety operations, emergency plan and reclamation plan. However, there has not yet been an EIA undertaken on the basis of processing at the intended rate of 7,400 tonnes per day.
Source: Authors photo
Valuations
Peer comparison matrix Peers used for the primary comparison are taken from the World Gold Analyst Special Report- China 2007, in combination with a current list of gold- focused development/mining companies operating in China and listed on the TSX. Companies with NI 43-101 compliant resource estimates for gold mining or development operations in China were selected as comparable peers for MJS. Where a company is producing other metals in addition to gold, these have been converted to a gold equivalent value based on the value ratio according to Platts metals prices (11.03.2011). Furthermore, if a company has additional precious metal assets outside of China, these have been included in the peer comparison in order to account for value attributed to the company by the market. Companies with diverse portfolios have been disregarded.
Table 11. Total Au equivalent Defined Resource.
Name Tiker Mcap(C$M) TotalAu(Moz) EV(C$ M) GrossMetalValue (C$M) Stage
Table 11 shows that there is a wide range in the size of the gold deposits currently being mined or developed in China by Canadian-listed companies. Eldorado Gold has a number of defined resources located both in China and elsewhere (see Sources and Assumptions), and therefore has a large total Au resource. China Gold International Resources Corp. Ltd. Has two deposits in China, one of which is polymetallic, so much of the total resource stems from Au equivalents. Continental Minerals Corp. has two deposits in China. The remaining four companies each have a single resource in China, and are therefore the most suitable peers to be considered. With this in mind it is evident that the Song Jiagou resource falls in the middle of the total Au single deposit size range.
Table 12. Enterprise Value/ Defined Au Resource.
Name Tiker Mcap(C$M) TotalAu(Moz) EV(C$ M) EV/TotalAu(C$/oz) Stage
EldoradoGold MincoGoldCorporation ChinaGoldInternational ResourcesCorp.Ltd. Inter CiticMineralsInc. Continental MineralsCorporation MajesticGoldCorp. MundoroMiningInc.
Table 12 indicates that, by comparison, MJS appears undervalued in relation to the companies selected for the peer comparison, with the exception of Mundoro Mining Inc (MUN). However, it should be noted that MUN is currently involved in a dispute with its Chinese JV partner*9. The JV partner wishes to terminate the JV company as it is believed that mining of the Maoling gold deposit will not be feasible due to environmental restrictions. This issue may explain the lower share price and hence significantly lower EV/Total Au value obtained for MUN. Looking at the other companies listed in Table 12, it can be seen that the value per ounce in the ground for MJS is lower than, but within the same approximate range as those for Continental Minerals Corp. and Inter-Citic Minerals Inc, both development stage
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companies. However, MJS is a producing company with ongoing construction, and as such appears significantly undervalued when compared with Eldorado Gold and China Gold International, two producing entities. The valuation attributed by the market to the companies in the peer comparison may in some cases reflect other assets in addition to Chinese gold deposits (see Source and Assumptions), so consideration of these factors should be made when interpreting the results shown in Tables 11 and 12.
*9News release published on Sedar, 9th Nov 2010
3 4 5 6 7 8 9 10 11 12
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NI43101SongjiagouPotentiallyMineable Resource Tonnes Indicated 29,875,527 Inferred 22,806,473 Total 52,682,000 Currentt/d Openpitminingofore 1,050 undergroundminingofore 350 Total Mined 1,400 ProcessingParameters Currentt/d Processplant1 350 Processplant2 1,050 NewProcessplant Total Processed 1,400 Meanoperatingcharacteristics ROMAuGrade (g/t) PlantAurecoveryrate Concentrate Augrade (g/t) SmelterAurecoveryrate 1.508 94% 30.00 94% MiningParameters
GradeAu(g/t) cutoff(Aug/t) 1.207 0.3 1.936 0.3 1.523 0.3 FutureCapabilityt/d 7,400 7,400 FutureCapabilityt/d 350 1,050 6,000 7,400 LifeofMine (yrs) Currentt/yr 346,626 126,000 472,626 Currentt/yr 126,000 378,000 504,000 111.5 Future t/yr 2,664,000 2,664,000 Future t/yr 115,542 346,626 1,980,720 2,442,888 19.8 C$/tore 11.30 11.30
OPEXscenarios RMB/tore Auore grade 0.50.6g/t 75.00 Auore grade >0.600g/t 75.00
SmeltingcostC$/tcon 15.07
G&AC$/tmilled
1.03
77,475,000 8,054,348 28,921,739 16,668,478 469,565 469,565 469,565 469,565 77,475,000 8,054,348 28,921,739 16,668,478 469,565 469,565 469,565 469,565 1,092,000 350,000 97,960 1,539,960 1,904,760 69,821 823,020 2,797,601 1,904,760 58,628 691,088 2,654,476 1,904,760 38,014 448,091 2,390,865 1,904,760 26,781 315,679 2,247,220 1,904,760 28,938 341,106 2,274,804 1,904,760 28,938 341,106 2,274,804 1,904,760 28,938 341,106 2,274,804
CFADS 44,921,776 204,719,091 136,793,113 79,521,673 57,835,458 65,110,500 14,515,817 0 Financing(C$) NewDebt ExistingDebt Interest Repayment Interest+DebtRepayment DSCR ProjectLife Ratio LoanLife Ratio RetainedCash 54,232,500 4,338,600 9,310,724 58,571,100 4,685,688 58,571,100 63,256,788 3 25.6 3.5
1,826,852
PBT 0 141,462,303 136,793,113 79,521,673 57,835,458 65,110,500 14,515,817 0 TAX 0 35,365,576 34,198,278 19,880,418 14,458,864 16,277,625 3,628,954 0 PAT 0 106,096,727 102,594,834 59,641,254 43,376,593 48,832,875 10,886,863 0 MJSPAT 0 79,572,546 76,946,126 44,730,941 32,532,445 36,624,656 8,165,147 0
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The VCL model presented in Table 14 is based on a long-term gold price of US$1,000/oz, which is conservative relative to current Au spot prices. The Song Jiagou Project NPV is calculated under three different discount rates (5%, 8% and 10%) and the corresponding MJS interest in the Song Jiagou Project is presented in each case, based on MJSs 75% interest in the net revenue. At a 10% discount rate, the project NPV is $507 M, and the interest to MJS is $380 M, which compares well to the pre-tax project NPV of $525 M stated by Wardrop in the Preliminary Assessment, which was based on a long-term gold price of $973 and a 10% discount. The model demonstrates that there is the potential for MJS to repay project debt in less than 2 years, even under this conservative gold price scenario The modelled profit to MJS in 2012 is notable, at $80 M. This figure is a consequence of MJSs plan to mine and process higher-grade ore over the initial few years of mine life (see Table 13a), resulting in revenues that appear high given the average grade of ore predicted to be mined over the entire 22 year mine life. Sources and assumptions
1 2 3 4 5 6 7
Figures for corporate ownership, interests, Indicated & Inferred resources, rate of future mining and processing, G&A, operational costs, capital cost, processing recovery rates and smelting costs and recovery rates were all taken from the 25th February 2011 Wardrop Preliminary Assessment Technical Report on the Song Jiagou project. Initial capital costs include indirect and contingency costs, and a 15% project development risk. Sustaining capital breakdown was provided by MJS and is not included in the Wardrop study. VCL has used the 0.3 g/t Au cut-off, rotated and capped, indicated and inferred mineral resource stated in the 2011 Wardrop study, as this is the likely approach that MJS will follow for mine planning. This is consistent with the mine plan stated in the Wardrop 2011 study. VCL feels it is appropriate to use the inferred resource defined in the NI 43-101 in addition to the indicated resource for the basis of the construction of this model and calculation of the life of mine as the project is currently in production & material falling into the inferred category is already being mined. Rate of mining and milling capability is taken from current/recent production. Future mining and milling capability is based on the assumption that MJS will achieve the production objectives stated in the 2011 Preliminary Assessment, and on the intended mill capacity stated in the Preliminary Assessment. Annual gold production has been calculated by VCL based on the Wardrop mine plan and projected milling capability. This involves the creation of a stockpile which is blended and added to towards the end of the 22 year mine life. As part of this mine plan, it is assumed that MJS will mine and mill high grade ore initially.. OPEX costs are calculated on an RMB per tonne of ore sliding scale as documented in the 2011 Wardrop Study. As part of this agreement, Dahedong provide all operational activities, paid for under this fee arrangement. In this model, in line with the mine plan adopted, this results in a mining fee of 75 RMB per tonne. Operating costs comprise of the August 2010 revised operating fees for mining, transporting & processing of ore from the open pit & underground mines at Song Jiagou. As part of this agreement there is a condition that should Au floatation recovery fall below 90%, there will be a downward adjustment to the charge akin to 7.5 RMB/t per 10% drop in recovery. Tailings disposal costs are understood to have been included in the Dahedong operation costs & are understood to be ~C$0.19/t milled G&A costs inclusive of operations in both Canada and China are stated in the 2011 Study. The G&A figure used is understood to be inclusive of general management, technical support, community development and environmental protection costs. There is an assumed parity between US$ and C$. Initial capital costs are assumed split on a 70:30 debt: equity basis. Given MJSs current production status and potentially rapid debt repayment capability, this ratio may be subject to change. The agreement between MJS and Dahedong also stipulates a financing fee corresponding to 10% of MJSs share of the capital costs. Sustaining capital breakdown is taken from Wardrops 2011 Preliminary Assessment. The exact breakdown of when and where this capital consumption is required is ultimately subject to management decisions in the future. As such, the authors have used the sustaining capital structure assumed by Wardrop and adopted a conservative approach in order to accommodate uncertainties in future capital expenditure. The draft sustaining capital breakdown provided by MJS was linearly up-scaled by VCL to correspond with the total value stated in the published Wardrop Study. In line with the Wardrop Study, the model has applied a resource tax and a production royalty payable to state entities, and a smelter tariff payable to the smelter. A corporate tax rate is assumed in addition to the aforementioned taxes and royalties. In documenting the mine plan, Wardrop have stated a mining recovery rate of 100% and a dilution rate of 0% which initially appears to be an unlikely scenario. However, on review of the Preliminary Assessment and associated mine plan, it is assumed that these conditions will be met through a process of blending and stockpiling the ore. VCL have conservatively assumed a long term gold price of US$1,000/oz.
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13 14 15
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Capital structure
Common Shares Total Warrants Total Options Exercise Price C$0.30 C$0.12 Total Exercise Price C$0.10 Number outstanding 499,826,309 Number Outstanding 52,889,197 52,889,197 Number Outstanding 1,775,000 20,000,000 21,775,000
rd
Notes Share structure as of 27th January 2011. Expiry date 16th July 2011 Notes
Notes
Fully diluted
574,490,506
Source: MJS
Key management
President, CEO and Director: Rod Husband
Mr. Husband has over 20 years of experience in all areas of economic geology with a particular focus in porphyry, epithermal, orogenic and skarn environments. In 1992, Mr. Husband became president and chief geologist of Pro Group Geological Ltd. With Pro Group Geological, Mr. Husband led initial exploration and advanced development for resource companies operating in Canada, United States, Chile, Peru, Honduras, Mexico, Philippines and Slovakia. He has a wide range of junior resource company management experience and has served on the board of several public companies listed on the TSX Venture Exchange. Mr. Husband is presently on the board of Majestic Gold Corp., Global Hunter Corp., and Verona Development Corp.
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Summary financials
Consolidated Statements of Operations and Deficit Unaudited 3 months ended 30th Dec 2010 C$ 1,899,832 Audited Year ended 30th Sept 2010 C$ 5,692,712Consolidated Balance Sheets Unaudited 3 months ended 30th Dec 2010 C$ Audited Year ended 30th Sept 2010 C$
Gold revenue Expenses Operating costs Depletion G&A Stock-based compensation Total Operating loss Other items Loan interest and fees Distribution of net profit Write-down of mineral property Gain on foreign exchange Total Loss before tax and noncontrolling interest Income tax expense Non-controlling interest Net loss Deficit, beginning Deficit, ending
Assets Current Assets: Cash Accounts Receivable Other Receivable Prepaid expenses and advances Inventory Investments Property & Equipment Mineral Property Interest and deferred exploration costs Total assets Current Liabilities Accounts payable & accrued liabilities Income taxes payable Loan payable Due to related parties Total Liabilities Non-controlling interest Shareholders equity Share Capital Share subscriptions receivable Contributed Surplus Accumulated other comprehensive income Deficit 51,959,614 52,150 4,256,613 132,581 (30,056,679) 26,344,280 29,076,644 42,363,600 4,256,613 180,292 (28,605,514) 18,194,991 23,020,918 1,872,111 408,204 103,855 2,384,170 348,194 1,605,268 280,765 2,215,615 386,516 4,488,164 337,763 4,920,964 829,950 66,536 158,223 172,582 5,478,524 17,449,865 29,076,644 1,791,845 1,029,388 69,701 177,369 224,132 220,293 2,236,849 17,271,341 23,020,918
1,302,714 7,162 1,493,909 2,803,785 903,953 81,502 159.307 168,533 409,342 1,313,295 127,439 10,431 1,451,165 28,605,541 30,056,679
4,618,68629,334 1,693,766 2,342,240 8,684,026 2,991,314 559,226 397,284 1,252,183 138,490 2,347,183 5,338,497 24,007 5,643,269 22,962,245 28,605,514
Consolidated Statements of Cash Flows Operating Activities Net loss for the period Items not affecting cash Accrued loan interest Depletion Foreign exchange gain not relating to operating activities Future income tax Loss on sale of mineral property Non-controlling interest Stock-based compensation Realized loss on investment Write-down of mineral properties Net Changes in non-cash working capital Accounts and other receivables Prepaid expenses and advances Inventory Accounts payable and accrued liabilities Income taxes payable Net cash used in operating activities Financing activities Share capital issued for cash, net of costs Advances from (repayments to) related parties Share subscriptions received in advance Repayment of loans Cash & cash equiv. provided by financing activities Investing activities Purchase of property, plant and equipment Expenditures on mineral properties Proceeds on sale of mineral property Proceeds on sale of investment Restricted cash Cash & cash equiv. provided by investing activities Cash inflow (outflow) during the period Cash & cash equiv, beginning of the period Cash & cash equiv, end of the period
Unaudited 3 months ended 30th Dec 2010 C$ (1,451,165) 81,502 7,162 10,431 202,604 19,146 224,132 286,222 127,439 (492,527) 9,596,014 (282,661) 52,150 (2,297,117) 7,068,386 (3,241,675) (185,686) (19,378) (3,446,740) 3,129,119 1,791,845 4,920,964
Audited Year ended 30th Sept 2010 C$ (5,643,269) 559,226 29,334 93,568 24,007 2,342,240 1,252,183 (230,241) (173,271) (224,143) (1,323,054) 280,765 (3,012,646) 970,000 152,020 1,122,020 (1,641,482) (483,100) 2,127,139 2,557 (1,888,069) 3,679,914 1,791,845
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Appendix
Majestic Gold Corp. Company Structure Majestic Gold Corp.
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VCL
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This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, without the prior written consent of Vicarage Capital Limited. Securities referred to in this research report may not be eligible for sale in those jurisdictions where Vicarage Capital Limited is not authorised or permitted by local law to do so. In particular, Vicarage Capital Limited does not allow the redistribution of this report to non-professional investors and cannot be held responsible in any way for third parties who affect such redistribution.
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VCL
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